Ask Auntie Pinko
May 29, 2003

Dear Auntie Pinko,

I got laid off last Fall and I haven't been able to find anything since, except a few temporary jobs. I must have sent my resumé out a thousand times by e-mail and regular mail. I have gotten only a few interviews. One was a couple of weeks ago, and it looked like I might get the job, but then the company called back and said that a big contract had fallen through and they weren't going to fill the position after all.

The economy sucks, and businesses just don't have what they need to fight it. I'm glad the Democrats lost on President Bush's tax cut. I think there's a lot wrong with it, but businesses need help any way they can get it. How come liberals don't understand that without businesses and employers, the economy doesn't work for anyone?

Andrew,
Moberly, MO

Dear Andrew,

Generalizations about liberal understanding are no more accurate than generalizations about conservative understanding, don't you think? I could respond by saying "How come conservatives don't understand that without labor and public investment, there is no economic prosperity for anyone?" And that would not be accurate, either. Economies don't include only one element, and they don't rely on any one element to produce prosperity.

Economies are complicated, dynamic systems. They are affected by a great many things, and we don't always fully understand how. Many of the things that affect economies can't be controlled by any human agency (the weather, for example;) and many others can be controlled only very imperfectly. And we have learned the hard way that even things we think we have some measure of control over, don't always produce the results we would like.

So it's easy to over-emphasize the things that we think we do understand, in economic planning. We know that capital investment usually makes economies grow, so stimulating capital investment is often considered first as a remedy when the economy seems to be contracting.

But we forget that there are other remedies that should be tried, as well. Labor is often left out of the equation, or even considered a negative factor. Yet a society that ignores its labor force frequently finds itself in a bind - capital is ready to invest, but the labor force is too costly, poorly trained, skilled in all the wrong ways, located in all the wrong places, etc. A critical example right now is the health care issue.

Think about this, Andrew: If no business, anywhere in America, had to worry about the cost of paying for health insurance for its workers, or the issue of competing for skilled workers based on health benefits, how many jobs would suddenly be created?

Another strategy for dealing with a contracting economy (and it's been very successful indeed, in the past) is public investment in the country's economic infrastructure. A combination of public incentives for homeownership, and public investment in the development of the Interstate Highway system prevented the emergence of what easily could have been a terrific depression after World War II, with so many soldiers returning to the labor force and the big industrial production of war material winding down.

There are many reasons to be unhappy about the current tax cut that cross ideological lines. The here-again-gone-again nature of many of the provisions gives it a smoke and mirrors aspect that even makes many conservatives uneasy. But from the ideological standpoint, I think liberal opposition is not rooted so much in a misunderstanding of capital's (or businesses') role in the economy, than in frustration that it limits our ability to apply a balanced strategy that would bring labor and public investment into the picture, as well.

The economic and social upheavals of the late 19th and early 20th century reflected many decades of imbalance in how governments viewed the importance of labor and capital in economic decision making. Escalating cycles of boom and bust, massive financial scandals, and an inadequately regulated stock market were hallmarks of over-reliance on capital as the primary economic engine.

Poorly-conceived tax cuts, myopically focused on the empowerment of capital, ignore the role of labor in a prosperous economy, and deprive us of the ability to use public investment as an economic management tool. Liberals seek a public fiscal policy that focuses on the powers of labor and capital, and enables us to provide public investment in the infrastructure that supports the whole economy, where it will be most cost-effective and yield the greatest results.

I hope this gives you some insight into the ideological basis of liberal opposition to the tax cuts, Andrew, and thanks for asking Auntie Pinko!

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